Posts Tagged ‘Watco’

CN Wants STB to Move on Line Sales

October 12, 2021

Canadian National wants the U.S. Surface Transportation Board to allow it to complete its sale of various line in Michigan and Wisconsin before winter.

CN has proposed selling nearly 500 miles of the former Wisconsin Central to short line operator Watco.

The sale has been on hold since April after shippers, shipper groups and some elected officials expressed concerns about the sale.

Most of the lines are in Wisconsin but a few serve Michigan’s Upper Peninsula.

An attorney for CN last week asked regulators to act on the sale, saying the railroads  “desire to complete the proposed line sale transactions prior to the onset of winter and snowfall that could disrupt the efficient start-up of Watco operations.”

STB Head Wants More Rail Competition

July 14, 2021

Class 1 Railroads got an ear full on Tuesday from U.S. Surface Transportation Board Chairman Martin J. Oberman who suggested the carriers are shirking their obligations as common carriers due to pressure from Wall Street investors.

Speaking to the Midwest Association of Rail Shippers, Oberman called for more competition in the industry and is in agreement with an executive order issued last week by President Joseph Biden directing federal agencies to limit the dominance of large corporations.

 “There are just many, many parts of the country . . . where there’s just not real effective competition among rail carriers,” Oberman said.

In regards to railroads, the STB head said he sees a less robust freight rail system due to job cuts related to the implementation of Precision Scheduled Railroading.

Oberman also said that some commodities moved by rail have suffered due to Wall Street pressure for ever-lower operating ratios.

“While everybody applauds efficiency — and I do — I am concerned that we may well have stripped our resources down too far to keep our national rail network as healthy as it needs to be to rebuild the economy,” Oberman said.

He acknowledged that railroad did well in moving traffic as the economy rebounded from a recession last spring triggered by the COVID-19 pandemic.

Oberman and other STB members will be weighing these and other concerns in upcoming merger cases involving Canadian National acquiring Kansas City Southern, CSX buying Pan Am Railways, and a bid by Watco to buy CN’s former Wisconsin Central branch lines in Wisconsin and Michigan.

Amtrak’s relationships with its host railroads also are on the docket in a pair of cases, including involving Federal Railroad Administration mandated on-time performance standards.

STB Delays Watco Purchase of CN Lines

April 28, 2021

The U.S. Surface Transportation Board has put the brakes on a move by short line holding company Watco to acquire Canadian National trackage in Wisconsin and Michigan.

The board said it was responding to concerns that some shippers, shipper associations, and a Wisconsin congressman have raised about the transaction.

CN plans to sell to Watco 650 miles of light density branches that once belonged to the Wisconsin Central.

Watco had said it wanted to begin operating the lines on June 30.

Shippers Withdraw Objections to Watco Purchase of CN Lines in Wisconsin, Michigan

April 27, 2021

Objections to the acquisition by a short line holding company of Canadian National lines in Wisconsin and Michigan have been dropped.

The Wisconsin Central Group and the Lake States Shippers Association dropped their challenge after meeting with officials from Watco, which plans to buy 650 miles of CN track.

The shipper groups notified the U.S. Surface Transportation Board of their new position in a filing with the board.

The filing indicated that Watco has addressed the concerns of the shippers, including that Watco would be subject to the same conditions the STB imposed on CN as part of its 2001 purchase of Wisconsin Central.

The shippers now support Watco’s acquisition of the CN lines.

Watco hopes to begin operations on the lines in question on June 30.

Shippers Express Support for Watco Acquisition of CN Lines in Michigan, Wisconsin

April 17, 2021

Even as some shippers are raising concerns others have expressed support for the sale by Canadian National of several lines in Wisconsin and the upper peninsula of Michigan.

The lines, many of which were once operated by Wisconsin Central, are being acquired by short line operator Watco.

The transaction involves 650 miles of what CN described as light density routes. Watco hopes to begin operating the routes on June. 30.

A major shipper group, a current shipper, railroad associations in Wisconsin and Michigan, a county economic development agency, and a Wisconsin business group are urging the U.S. Surface Transportation board to approve the deal.

“Access to reliable rail service is critically important to the viability of our agriculture, timber, and manufacturing sectors in the states of Wisconsin and Michigan. Having a company like Watco operating these important branch line segments is a great move towards the future of rail transportation in these regions,” wrote Kurt Bauer, who leads Wisconsin Manufacturers & Commerce, the state’s chamber of commerce and largest business association.

Rail consultant William Schauer, a former vice president of marketing at Wisconsin Central, wrote in a letter to the STB that “the Wisconsin Central is gone and will not be coming back.”

He said the former WC main line remains vital to CN as a link between Western Canada and Chicago.

Shippers Want Review of CN Line Sales

April 15, 2021

Two shipper groups have objected to the sale of Midwest branch and secondary mainlines by Canadian National to short line holding company Watco.

The Wisconsin Central Group and the Lake States Shippers Association have asked the U.S. Surface Transportation Board to deem the sale of 650 miles of track in Wisconsin and the Upper Peninsula of Michigan as a “significant” transaction that would require board review.

CN and Watco contend that the sale is exempt from STB review.

The shippers said they are taking no position on the merits of the CN-Watco deal, but said conditions attached to CN’s 2001 acquisition of Wisconsin Central could be applied to Watco.

Another objection by the shippers is that CN and Watco did not consult with them during the sale negotiations.

“The proposed transaction is ‘significant’ for the broad Great Lakes Forests Region and its communities and, in the present context is significant for the nation’s general system of railroad transportation as a whole. It is not a private matter to be resolved between and among private railroads behind closed doors,” wrote John Duncan Varda, the lawyer for Wisconsin Central Group and Lake States Shippers Association, in an STB filing.

Several other parties also sent letters to the STB asking regulators to review the CN-Watco transaction.

The letters caught some railroad industry observes off guard.

“I’m surprised that this is the least bit contentious. Sales of short line properties are always negotiated in private,” William Schauer, a rail consultant and former Wisconsin Central official, told Trains magazine.

Schauer believes the transaction will be good for shippers because they will receive better service and more attention from Watco than they would get from CN.

One industry observer believes the reaction to the line sale is in part a lingering legacy of the 2001 CN acquisition of Wisconsin Central.

In particular, shippers may still have grievances about the rapid operational changes CN made after buying WC.

Analyst Anthony B. Hatch told Trains that the way the changes were made upset many shippers and led to Wisconsin becoming a hotbed of anti-railroad sentiment.

Hatch believes that having Watco own the affected rail lines will be good for shippers because short lines hustle for local business.

“You’d think this would be a very positive thing,” he said. “For those who want more service up there, having a short line work hard for two loads a week is a good thing. Watco has a good reputation with customers.”

Watco Hopes to take Over CSX Routes in Early September

August 14, 2018

Two CSX routes in Indiana and Illinois are expected to begin operation in early September by subsidies of short-line operator Watco.

The Decatur & Eastern Illinois Railroad will take over the Decatur Subdivision in Illinois and the neighboring Danville Secondary in Indiana on or around Sept. 6, pending regulatory approval, Watco said in a filing with the Surface Transportation Board.

Watco recently landed the support of agricultural products company Archer Daniels Midland, which is one of the largest shippers in the territory.

ADM recently told the U.S. Suraface Transportation Board that it supports Watco’s big to buy 126.7 miles of track from CSX.

The sale also includes 3.6 miles of trackage rights on Canadian National (former Illinois Central) in Decatur, Illinois.

The Decatur Sub (nee Baltimore & Ohio) extends between Montezuma, Indiana, and Decatur. The Danville Secondary (nee New York Central) extends between Terre Haute, Indiana, and Olivet, Illinois, and includes the Paris Industrial Track in Paris, Illinois.

Watco projects revenue to top $5 million from the 14 customers currently served by CSX routes.

The STB filings do not disclose the sale price of the routes.

A Watco spokeswoman said the carrier plans to assign six GP38-2s to the routes. The company plans to hire four conductors, five engineers, a locomotive laborer, a track inspector, two track laborers, and two track foremen.

CSX put the routes up for sale last January.

WATCO Buying CSX Lines in Indiana, Illinois

July 9, 2018

Two CSX secondary routes in Indiana and Illinois are being acquired by Watco Companies.

The 126.7 miles of track involved in the transaction includes the Decatur and Danville Secondary subdivisions.

The routes are former Baltimore & Ohio and New York Central respectively.

Watco plans to name the property the Decatur & Eastern Illinois Railroad will be the new name for the 126.7 miles of track that Watco will acquire from CSX as the Class I railroad seeks to prune its network of lower-density, non-core routes.

The Decatur Subdivision extends from its namesake city in Illinois to Montezuma, Indiana. It once extended between Indianapolis and Springfield, Illinois.

The Danville Secondary runs from Terre Haute, Indiana, and Olivet, Illinois, and also includes the Paris Industrial Track in Paris, Illinois.

The track between Terre Haute and Paris once was part of the NYC’s Indianapolis-St. Louis mainline and hosted such crack passenger trains as the Southwestern Limited, Knickerbocker and Missourian.

The track north of Paris was a Central route that linked Northwest Indiana and Cairo, Illinois.

Watco has told the CSX union members who work on the affected lines that it will have employment opportunities in Decatur and Paris.

The Pittsburg, Kansas-based short line company is looking to hire four conductors, five engineers, a locomotive laborer, a track inspector, two track laborers and two track foremen.

CSX, which put the lines up for sale last January, expects the sale to close in early August.

Affected CSX employees who choose not to go to work for Watco, retire or resign, will be given the option of remaining with CSX.

Neither CSX or Watco disclosed the terms of the proposed sale.

Watco operates 38 short-line railroads in the United States with 5,100 miles of track. It also holds 31 industrial contract switching contracts.

Dispute Leaves Michigan Shippers Without Rail Service; STB Asked to Break the Deadlock

September 21, 2016

A dispute between the Grand Elk Railroad and CSX has left a half-dozen Michigan shippers without rail service for the past six weeks.

STBThe two railroads are arguing over a 3-mile stretch of track in Grand Rapids, Michigan, owned by CSX and over which Norfolk Southern had trackage rights.

CSX last month said that Grand Elk can not use the track because the NS trackage rights were not conveyed to the Grand Elk when it leased an NS line in 2008.

Grand Elk, which is owned by Watco, has asked the U.S. Surface Transportation Board to rule on the matter, asking the board to render a decision as soon as possible.

The short line said the trackage rights were “inadvertently” left out of Watco’s agreement with NS.

For its part, CSX has asked the STB to deny Grand Elk’s petition and argues that the short line has been operating illegally on the track in dispute.

Grand Elk, which began operating the former Conrail line in 2009, contends that it assumed that trackage rights had been assigned to it even if they were not specifically stated in the lease agreement.

In a filing before the STB, Grand Elk said if the trackage rights had been excluded, it would make no sense to sign the lease agreement.

CSX told the STB that Grand Elk had six opportunities to include the disputed trackage, but failed to do so when it negotiated the lease agreement with NS.

“CSX believes that [Grand Elk] has been operating surreptitiously over the line to mislead shippers about the product it is selling,” a CSX filing said.

It said Grand Elk’s failure to obtain STB authorization for more than seven years should not be viewed as an oversight but part of an illegal operation on CSX track.

CSX also contends that all previous trackage rights agreements expired in 2014. Grand Elk has sought to circumvent this by asking the STB to make the trackage rights retroactive to 2009.

The dispute dates to an effort in the 1980s by the city of Grand Rapids and the Michigan Department of Transportation to reduce the number of railroad lines in Grand Rapids in order to improve traffic safety.

The Chesapeake & Ohio gave Conrail trackage rights so it could abandon its right-of-way.

The 122-mile Conrail route in question extends from Grand Rapids to Elkhart, Indiana, and was conveyed to NS as part of the 1999 Conrail breakup.

Supporting the Grand Elk are shippers, city government and state elected officials.

One such shipper is Brink Farms, which in 2015 built a $2 million transload facility in Grand Rapids that has sat idle due to the trackage rights dispute.

Brink, which provides bulk transportation service for farmers, including feed, fertilizer, and grain, has another Grand Rapids facility that is not affected by the dispute.

Filings in the case indicate that CSX has said it will provide switching at the new Brink facility for $300 per car move, whereas Grand Elk would charge $105.

Brink said the CSX charges make it cost-prohibitive to use its new transload site. Brink Farms ships about 1,000 cars per year.

KRR Now Operating in Ohio

August 23, 2016

The entire former West Virginia Secondary of Norfolk Southern is now back in operation.

Kanawha River RailroadThe Kanawha River Railroad is now operating loaded coal trains between West Virginia and Columbus, where they are handed off to Norfolk Southern for forwarding to Sandusky.

The first of those trains operated on Monday and was the first time that most of the West Virginia Secondary had seen a train since NS mothballed it last February.

Trains magazine reported that the first unit coal train had two NS locomotives and two SD60s leased by NS to the KRR, which is a property of Watco Companies.

KRR plans to restore shipping chemicals by rail within the next few weeks.